Knollwood Industries Inc. is currently operating at 50% capacity and manufacturing 100,000 units of a patented...

 

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Knollwood Industries Inc. is currently operating at 50% capacity and manufacturing 100,000 units of a patented electronic component. The cost structure of the component is as follows: Unit Material Cost Unit Labor Cost Batch Costs (10,000 per batch) Product Costs (salaries) $2.50 per unit $2.00 per unit $1,000 per batch $100,000 per year A potential new customer has offered to purchase 70,000 units at a price of $7 per unit. The normal selling price per unit is $10. This special order will not impact any of Knollwood's current business. Should Knollwood accept this Special Order? Show the calculation that helps you develop your answer. Knollwood Industries Inc. is currently operating at 50% capacity and manufacturing 100,000 units of a patented electronic component. The cost structure of the component is as follows: Unit Material Cost Unit Labor Cost Batch Costs (10,000 per batch) Product Costs (salaries) $2.50 per unit $2.00 per unit $1,000 per batch $100,000 per year A potential new customer has offered to purchase 70,000 units at a price of $7 per unit. The normal selling price per unit is $10. This special order will not impact any of Knollwood's current business. Should Knollwood accept this Special Order? Show the calculation that helps you develop your answer.

Answer rating: 100% (QA)

Acceptance of Special Order Special order will not impact any current ... View the full answer